House Republicans Introduce a Revised Tax BillDecember 12, 2018
On Dec. 10, House Republicans unveiled a revised year-end tax bill that would abandon earlier provisions aimed at resurrecting expired tax breaks, or “extenders,” after the House leadership was forced to pull an earlier version of the measure, H.R. 88. The original year-end tax bill stalled on Nov. 30 when an expected vote in the House was scrapped because the measure didn’t have the votes to pass.
The latest plan still includes some technical corrections to the Tax Cuts and Jobs Act (TCJA), tax relief for disaster victims, new tax subsidies for retirement savings, Internal Revenue Service (IRS) restructuring, and further delays in some Affordable Care Act (ACA) taxes. However, it drops proposed tax extenders that were in the original bill.
House Ways and Means Committee Chairman Kevin Brady (R-Texas) opted to delete $29.9 billion worth of tax provisions (extenders) because they are continually revived for a year or two at a time, and faced Republican opposition in the House. Those provisions included a one revenue-raiser disliked by the coal mining industry, which would extend the current tax they pay to support disabled miners with black lung disease; the tax would otherwise be slashed substantially next year.
At the same time, Rep. Brady added a host of measures favored by Republicans, including rollbacks of several health care-related taxes, a fix to last year’s tax law for the recreational vehicle industry and add-ons favored by conservatives, such as an expansion of 529 education savings accounts for home-schooling expenses and repeal of the so-called Johnson Amendment, which prohibits churches and charities from making political endorsements or risk losing their nonprofit status.
Specific provisions in this legislation include, but are not limited to:
- Disaster Tax Relief: Targeted and needed temporary tax relief for individuals hit by storms and natural disasters in Alabama, California, Florida, Georgia, Hawaii, Indiana, North Carolina, South Carolina, Texas, Virginia, Wisconsin, American Samoa, Guam, and the Northern Mariana Islands.
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- Retirement and Family Savings: Provisions from the House-passed Family Savings Act – including expansion of 529 savings accounts –as well as the Senate Finance Committee-passed Retirement Enhancement and Savings Act.
- ACA Tax Relief: Delays the Medical Device Tax for five years—until 2025, delays the Health Insurance Tax for two years—until 2022, delays the Cadillac Tax for one year—until 2023, and permanently repeals tax on indoor tanning-bed services, at a relatively small cost of about $400 million over a decade.
- Various Tax Provisions:Includes several minor and time-sensitive technical corrections to the Tax Cuts and Jobs Act. Additionally, includes clarification regarding treatment of veterans groups under existing infrastructure-related provisions. The bill also contains some important provisions for tax-exempt entities, including repealing a tax on transportation fringe benefits for such entities and repealing the Johnson Amendment.
- IRS Reform:Includes bipartisan, bicameral provisions to ensure the IRS puts taxpayer’s first. These provisions passed the House nearly unanimously earlier this year.
Changes to the 2010 health care law alone would add $52 billion to deficits over the next decade. The total cost of the new package, Brady said, is $80 billion. That includes provisions from the original bill, such as $13.5 billion in 10-year costs for retirement savings incentives and $1.8 billion to exempt churches and other nonprofits from being taxed on parking and other transportation fringe benefits.
Rep. Brady is hopeful that Democrats will support the revised tax proposal because of their support of sections of the bill that would overhaul the IRS, which the House passed as a stand-alone bill by a vote of 414-0 earlier this year; temporary tax breaks for residents in areas hit by hurricanes Michael and Florence, among other natural disasters; and retirement savings provisions that have also garnered support from Democrats.
The extenders portion, along with disaster relief and the IRS provisions in particular have wide support in the Senate, according to Sen. Charles Grassley (R-Iowa). However, he predicted that the only viable option for these sections to become law is as part of a year-end spending bill.
Click here to read the full bill.